There is substantial evidence that internalized stigma and related processes have profound negative effects upon both the objective (e.g., social functioning) and subjective (e.g., self-esteem and well-being) components of recovery for persons with severe mental illness (SMI) that persist independent of the severity of symptoms;however, few efforts have been made to develop treatment to address this issue. There is nevertheless support that both cognitive-behavioral therapy and narrative psychotherapy are promising approaches for addressing self-conceptualizations among people with SMI. The purpose of the present Exploratory Intervention Development study is to develop and study a structured, group-based Narrative Enhancement/Cognitive Therapy (NECT) intervention geared toward reducing internalized stigma and improving related outcomes among people with SMI. This intervention developed will focus on identifying and challenging internalized stigma beliefs, and will be facilitated by principles of an integrative recovery-oriented narrative psychotherapy for people with SMI. After developing and pilot testing the intervention with a group of 10 persons, we will screen 150 persons with SMI at two sites (New York and Indiana) for evidence of high internalized stigma. We will then conduct an initial randomized study of NECT vs. treatment as usual in a sample of 50 individuals with SMI meeting criteria for high internalized stigma. The specific aims of the project are to: 1) Develop a manualized group-based NECT treatment for persons with SMI who have high internalized stigma that can be implemented in routine settings;2) conduct an initial randomized study of the effectiveness of the group-based treatment, comparing outcomes for persons randomly assigned to the NECT treatment with outcomes for persons remaining in treatment as usual;and 3) examine the mediating impact of changes in use of problem-centered coping strategies on outcomes for persons assigned to the NECT treatment. The proposed research responds to PAR-06-248 "From Intervention Development to Services: Exploratory Research Grants (R34)." The intervention, if found to be effective, can have important implications for enhancing usual care services to facilitate recovery and reduce disability for people with SMI, and therefore has potentially important implications for improving the public health.